On Friday, a power cut at a Samsung Electronics plant near
Seoul forced the South Korean memory giant to shut down six of its chip
production lines. The outage sparked expectations of decreases in memory supply
and higher prices.

A Samsung spokeswoman explained to Reuters
that a problem in the afternoon at the switchboard at a transformer substation
led to a power shortage. The company’s advanced NAND flash memory lines was one
of the lines affected by power issue.

Shares of competing memory makers Toshiba and Hynix gained
on the market following the expectations of higher memory prices, while shares
of Samsung dipped slightly. Shares major NAND flash memory clients, such as
Apple for its use of flash in its iPod music players, also fell on expectations
of higher NAND costs.

Although Samsung told the press that it could take up to two
days to resume normal operations, the company was able to reach full operation around
noon Saturday – making actual damage and losses of the power outage less than
originally anticipated. The company now expects to lose
40 billion won ($43.4 million) from the outage.

"Some of the wafers that were being processed when the
outage hit can be salvaged, and the potential yield from the recovered wafers
was at a good level," said Choi Chang-sik, executive vice president at
Samsung's semiconductor division, at a news
conference in Kiheung.

In response to last week’s mishap, Samsung said today that
it plans to increase production to help make up for lost ground. The company
added that it would try to meet its monthly targets in spite of the downtime.

"Regarding any concerns about the lingering impact of
this accident, our third-quarter results will show ... we'll do our best to
outperform the market's expectation," said Hwang Chang-gyu, the president
of Samsung's semiconductor business.

Samsung’s plan of increasing NAND production may have a negative effect on the memory maker’s other product lines. Tom Duong, vice president of business development
at Mushkin, believes that Samsung may have to cut back on its DRAM production
in order to make up for losses on NAND.

“From my understanding, the lines that are affected are the
lines that produce NAND flash. So to subsidize, Samsung will probably have to
switch some of their DRAM line to make up for the loss of NAND production,” Duong
told DailyTech. “Thus, it will hamper
supply of DRAM thus causing an increase in prices.”

"It looks like the iPhone 4 might be their Vista, and I'm okay with that." -- Microsoft COO Kevin Turner